Shredded: Inside RBS, The Bank That Broke Britain

Ian Fraser, MA 1983

Shredded covers the period from Royal Bank of Scotland’s incorporation in 1727 to the present day. But its main focus is the period since 2000, when under the leadership of former chief executive Fred Goodwin, RBS grew to become the largest bank in the world by assets. The bank's October 2008 near implosion, which required a £45.5 billion taxpayer funded bailout to prevent, was probably inevitable given its toxic internal culture, reckless bubble-era lending to frothy sectors including commercial property and leveraged buyouts; naive faith in subprime derivatives even after they were rejected by savvier Wall Street firms, and its ill-conceived €71.1bn takeover of ABN Amro.

Shredded outlines how, by terrorising subordinates, gaming financial regulations and misleading politicians, Goodwin created a poisonous cocktail that ensured the bank could blow up at any time.

But the book makes clear it wasn’t all Goodwin’s fault. Institutional investors and analysts in the City of London gave Goodwin—who was surfing a tide of hyperbole following RBS’s £21bn acquisition of NatWest in March 2000—carte blanche to do as he chose in the early years of his reign and green-lighted catastrophic moves such as the ABN Amro takeover.

When it came to ensuring the bank was responsibly managed, RBS’s chairmen and non-executive directors turned out to be largely useless. Its auditors Deloitte added to the bank’s precariousness with their reluctance to challenge deceptive accounting. Deluded politicians, notably former Chancellor of the Exchequer Gordon Brown, regulators and central bankers were also hugely to blame, thanks to their blind faith in the competence and integrity of RBS’s management and determination to embark on a Alan Greenspan-inspired regulatory race-to-the-bottom.

But Shredded isn’t just about the catastrophic failures of one bank and those who were supposed to oversee it. It is also about what went wrong with the wider banking and financial system from the 1980s onwards, detailing a catalogue of political, regulatory and ideological missteps. The book concludes by suggesting that the UK’s failure properly to reform the finance sector has left RBS, the British banking system and the wider economy vulnerable to further collapses.

Shredded: Inside RBS, The Bank That Broke Britain was longlisted for FT/McKinsey business book of the year, and was named a Book of the Year by the Financial Times, Bloomberg, The Week and Huffington Post.

ISBN: 978 1 78027 138 5 (hardback) / 978 1 78027 277 1 (paperback)